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Article by DailyStocks_admin    (08-27-08 06:54 AM)

Filed with the SEC from Aug 14 to Aug 20:

Gaylord Entertainment (GET)
Gamco Investors (GBL) wants Gaylord's board to redeem the preferred- share purchase rights issued under a poison-pill agreement. Gaylord issued one right for each common share, exercisable if a person or group acquires ownership of 15% or more of its common. Gamco wants the board to redeem the rights or submit the issue to a vote of the shareholders, and is seeking to have its proposal included in the proxy for Gaylord's 2009 annual shareholders' meeting. Gamco owns 3,981,383 shares (9.75%).

BUSINESS OVERVIEW

Item 1. Business
We are the only hospitality company whose primary focus is the large group meetings segment of the lodging market. Our hospitality business includes our Gaylord branded hotels, consisting of the Gaylord Opryland Resort & Convention Center in Nashville, Tennessee (“Gaylord Opryland”), the Gaylord Palms Resort & Convention Center near Orlando, Florida (“Gaylord Palms”) and the Gaylord Texan Resort & Convention Center near Dallas, Texas (“Gaylord Texan”). We also own and operate the Radisson Hotel at Opryland in Nashville, Tennessee. We are also developing a hotel, to be known as the Gaylord National Resort & Convention Center, in Prince George’s County, Maryland (in the Washington, D.C. market) (“Gaylord National”), which we plan to open in 2008.
Driven by our “All-in-One-Place” strategy, our award-winning Gaylord branded hotels incorporate not only high quality lodging, but also significant meeting, convention and exhibition space, superb food and beverage options and retail and spa facilities within a single self-contained property. As a result, our properties provide a convenient and entertaining environment for our convention guests. In addition, our custom-tailored, all-inclusive solutions cater to the unique needs of meeting planners.
We also own and operate several attractions in Nashville, including the Grand Ole Opry, a live country music variety show, which is the nation’s longest running radio show and an icon in country music. Our local Nashville attractions provide entertainment opportunities for Nashville-area residents and visitors, including our Nashville hotel and convention guests, while adding to our destination appeal.
We were originally incorporated in 1956 and were reorganized in connection with a 1997 corporate restructuring.
Our operations are organized into three principal business segments: (i) Hospitality, which includes our hotel operations; (ii) Opry and Attractions, which includes our Nashville attractions and assets related to the Grand Ole Opry; and (iii) Corporate and Other, which includes corporate expenses and results from our minority investments. These three business segments — Hospitality, Opry and Attractions, and Corporate and Other — represented approximately 89.6%, 10.4%, and 0.0%, respectively, of total revenues in the twelve months ended December 31, 2007. Financial information by industry segment and our Gaylord hotel properties as of December 31, 2007 and for each of the three years in the period then ended, appears in Item 6, “Selected Financial Data,” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in the Financial Reporting by Business Segments note (Note 16) to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
Strategy
Our goal is to become the nation’s premier hotel brand serving the meetings and conventions sector and to enhance our business by offering additional vacation and entertainment opportunities to our guests and target consumers. Our Gaylord branded hotels focus on the approximately $135 billion large group meetings market in the United States. Our properties and services are designed to appeal to meeting planners who arrange these large group meetings.
“All-in-One-Place” Product Offering. Through our “All-in-One-Place” strategy, our Gaylord branded hotels incorporate meeting and exhibition space, signature guest rooms, award-winning food and beverage offerings, fitness and spa facilities and other attractions within a large hotel property so our attendees’ needs are met in one location. This strategy creates a better experience for both meeting planners and our guests, allows us to capture a greater share of their event spending, and has led to our Gaylord hotels claiming a place among the leading convention hotels in the country.
Create Customer Rotation Between Our Hotels. In order to further capitalize on our success in Nashville, we opened our Gaylord Palms hotel in January 2002 and our Gaylord Texan hotel in April 2004, and are scheduled to open our Gaylord National hotel, which will be located in the Washington D.C. area, in 2008. We also anticipate introducing additional Gaylord hotel properties through acquisition followed by renovation and expansion of acquired properties, as well as through management of select properties on behalf of third-party owners. Consistent with our existing properties, these hotel properties would have high meeting space to room ratios, be located in key resort and urban locations and provide a self-contained destination experience. We have focused the efforts of our sales force to capitalize on our expansion and the desires of some of our large group meeting clients to meet in different parts of the country each year and to establish relationships with new customers as we increase our geographic reach. We believe there is a significant opportunity to establish strong relationships with new customers and rotate them among our properties.

Leverage Brand Name Awareness. We believe the Grand Ole Opry is one of the most recognized entertainment brands in the United States. We promote the Grand Ole Opry name through various media, including our WSM-AM radio station, the Internet, television and performances by the Grand Ole Opry’s members, many of whom are renowned country music artists, and we believe that significant growth opportunities exist through leveraging and extending the Grand Ole Opry brand into other products and markets. As such, we have alliances in place with multiple distribution partners in an effort to foster brand extension. We are continuously exploring additional products, such as television specials and retail products, through which we can capitalize on our brand affinity and awareness. We believe that licensing our brand for products may provide an opportunity to increase revenues and cash flow with relatively little capital investment.
Industry Description
Hospitality
According to Tradeshow Week, the large group meetings market annually generates approximately $135 billion of revenues for the companies that provide services to it. The convention hotel industry is estimated to generate approximately $23 billion of these revenues. These revenues include event producer total gross sales (which include exhibitor and sponsor expenditures) and attendee “economic impact” (which includes spending on lodging, meals, entertainment and in-city transportation), not all of which we capture. The convention hotels that attract these group meetings often have more than 1,000 guest rooms and, on average, contain approximately 109,000 square feet of exhibit space and approximately 40 meeting rooms.
According to Meetings & Conventions magazine, the group meetings market is comprised of approximately 1.2 million events annually, of which approximately 80% are corporate meetings and approximately 20% are association meetings. Nearly half of the venues hosting these events contain less than 100,000 square feet of exhibit or meeting space, with only 8% containing over 500,000 square feet. Examples of industries participating in these meetings include health care, home furnishings, computers, sporting goods and recreation, education, building and construction, industrial, agriculture, food and beverage, boats and automotive. Conventions and association-sponsored events, which draw a large number of attendees requiring extensive meeting space and room availability, account for over half of total group spending and economic impact. Because associations and trade shows generally select their sites 2 to 6 years in advance, thereby increasing earnings visibility, the convention hotel segment of the lodging industry is more predictable and less susceptible to economic downturns than the general lodging industry.
A number of factors contribute to the success of a convention center hotel, including the following: the availability of sufficient meeting and exhibit space to satisfy large group users; the availability of rooms at competitive prices; access to quality entertainment and food and beverage venues; destination appeal; appropriate regional professional and consumer demographics; adequate loading docks, storage facilities and security; ease of site access via air and ground transportation; and the quality of service provided by hotel staff and event coordinators. The ability to offer as many as possible of these elements within close proximity of each other is important in order to reduce the organizational and logistical planning efforts of the meeting planner. The meeting planner, who acts as an intermediary between the hotel event coordinator and the group scheduling the event, is typically a convention hotel’s direct customer. Effective interaction and coordination with meeting planners is key to booking events and generating repeat customers.

Gaylord Hotels — Strategic Plan. Our goal is to become the nation’s premier brand in the meetings and convention sector. To accomplish this, our business strategy is to develop resorts and convention centers in desirable event destinations that are created based in large part on the needs of meeting planners and attendees. Using the slogan “All-in-One-Place,” our hotels incorporate meeting, convention and exhibition space with a large hotel property so the attendees never have to leave the location during their meetings. This concept of a self-contained destination dedicated primarily to the meetings industry has made Gaylord Opryland one of the leading convention hotels in the country. In addition to operating Gaylord Opryland, we opened the Gaylord Palms in January 2002 and the Gaylord Texan in April 2004, and we plan to open the Gaylord National hotel in the Washington, D.C. area in 2008. We believe that our other hotels will enable us to capture additional convention business from groups that currently utilize Gaylord Opryland but must rotate their meetings to other locations due to their attendees’ desires to visit different areas. We also anticipate that our other hotels will capture new group business that currently does not come to the Nashville market and will seek to gain additional business at Gaylord Opryland in Nashville once these groups have experienced a Gaylord hotel in other markets.
Gaylord Opryland Resort and Convention Center — Nashville, Tennessee. Our flagship, Gaylord Opryland in Nashville, is one of the leading convention destinations in the United States based upon number of rooms, exhibit space and conventions held. Designed with lavish gardens and expansive atrium areas, the resort is situated on approximately 172 acres in the Opryland complex. Gaylord Opryland is one of the largest hotels in the United States in terms of number of guest rooms. Gaylord Opryland has a number of themed restaurants, retail outlets, and a full-service spa with 27,000 square feet of dedicated space and 12 treatment rooms. It also serves as a destination resort for vacationers due to its proximity to the Grand Ole Opry, the General Jackson Showboat, the Gaylord Springs Golf Links (Gaylord’s 18-hole championship golf course), and other attractions in the Nashville area. Gaylord Opryland has 2,881 guest rooms, four ballrooms with approximately 127,000 square feet, 111 banquet/meeting rooms, and total dedicated exhibition space of approximately 264,000 square feet. Total meeting, exhibit and pre-function space in the hotel is approximately 600,000 square feet. The Gaylord Opryland has been recognized by many industry and commercial publications, receiving Successful Meetings magazine’s Pinnacle Award in 2007, as well as Meeting & Convention’s Gold Key Elite and Gold Platter Awards for 2007. We currently have planned a $400 million expansion of Gaylord Opryland. This planned expansion, expected to commence late in 2008 or early 2009, would add about 400 guest rooms, a significant amount of new meeting facilities, and a parking garage to existing facilities.

Gaylord Palms Resort and Convention Center — Kissimmee, Florida. Gaylord Palms has 1,406 signature guest rooms, three ballrooms with approximately 76,000 square feet, 76 banquet/meeting rooms, and total dedicated exhibition space of approximately 180,000 square feet. Total meeting, exhibit and pre-function space in the hotel is approximately 400,000 square feet. The resort is situated on a 65-acre site in Osceola County, Florida and is approximately 5 minutes from the main gate of the Walt Disney World ® Resort complex. Gaylord Palms has a number of themed restaurants, retail outlets and a full-service spa, with 20,000 square feet of dedicated space and 25 treatment rooms. Hotel guests also have golf privileges at the world class Falcon’s Fire Golf Club, located a half-mile from the property. The Gaylord Palms has been recognized by many publications, receiving Successful Meetings magazine’s Pinnacle Award in 2007, Meeting and Convention’s Gold Key and Gold Platter Elite Awards for 2007 and being named Best Resort Hotel by Florida Monthly magazine for 2007.
Gaylord Texan Resort and Convention Center — Grapevine, Texas. Gaylord Texan is situated on approximately 100 acres and is located approximately six minutes from the Dallas/ Fort Worth International Airport. The hotel features a lavish and expansive atrium, 1,511 signature guest rooms, 3 ballrooms with approximately 85,000 square feet, 70 banquet/meeting rooms, and total dedicated exhibition space of approximately 180,000 square feet. Total meeting, exhibit and pre-function space in the hotel is approximately 400,000 square feet. The property also includes a number of themed restaurants, retail outlets and a full-service spa with 25,000 square feet of dedicated space and 12 treatment rooms. Guests also have access to the adjacent Cowboys Golf Club. In 2006, we opened the Glass Cactus entertainment complex, an approximately 39,000 square feet venue with a performance stage, dance floor, and a two-story outdoor deck, on land we own adjacent to the hotel. In 2004, the Gaylord Texan was named the “Development of the Year” by the Americas Lodging Investment Summit. In 2007, the Gaylord Texan received Meeting and Convention’s Gold Key and Gold Platter Awards and was named a AAA Four-Diamond Award winner, and in 2005 the hotel was named “Best Place to Work in Dallas/Fort Worth” by the Dallas Business Journal. We currently have planned a $315 million expansion of Gaylord Texan. This planned expansion, expected to commence in late 2008, would add approximately 500 guest rooms and approximately 200,000 square feet of additional meeting and prefunction space and additional leisure amenities, including an outdoor resort pool.
Gaylord National Resort and Convention Center — Prince George’s County, Maryland. We are developing a hotel, to be known as the Gaylord National Resort and Convention Center, which is under construction on approximately 42 acres of land located on the Potomac River in Prince George’s County, Maryland (in the Washington, D.C. market). We currently expect to open the hotel in 2008. The hotel, which will be located eight miles south of Washington, D.C., will have 2,000 guest rooms and approximately 470,000 square feet of flexible meeting space. The hotel complex will include an 18-story glass atrium, a 20,000 square foot spa and fitness center, and entertainment options such as restaurants, shops, and a two-story rooftop nightclub.
Radisson Hotel at Opryland. We also own and operate the Radisson Hotel at Opryland, a Radisson franchise hotel, which is located across the street from Gaylord Opryland. The hotel has 303 rooms and approximately 14,000 square feet of meeting space. In March 2000, we entered into a 20-year franchise agreement with Radisson in connection with the operation of this hotel.
Potential Purchase of Westin La Cantera Resort. We entered into an Agreement of Purchase and Sale dated as of November 19, 2007 (the “Purchase Agreement”) with LCWW Partners, a Texas joint venture, and La Cantera Development Company, a Delaware corporation (collectively, “Sellers”), to acquire the assets related to the Westin La Cantera Resort, located in San Antonio, Texas (the “La Cantera Resort”). The La Cantera Resort property includes approximately 508 rooms, 39,000 square feet of meeting space and two championship golf courses. The Purchase Agreement also provides for our purchase of approximately 90 acres of undeveloped land adjacent to the resort property. The La Cantera Resort is one of the region’s most in-demand hotels for meetings and conventions. It has won numerous hospitality awards, including the 2007 AAA Four Diamond Award, the Condé Nast Traveler’s 2007 Gold List of “The World’s Best Places to Stay” and the 2007 AAA Four Diamond Award Restaurant for Francesca’s at Sunset.
The purchase price payable by us under the Purchase Agreement is $252.5 million, payable in cash at closing, which amount is subject to certain adjustments at closing. In addition, we will be required to pay a termination fee in an amount not to exceed $3.3 million at closing in connection with the termination of the current management agreement for the La Cantera Resort.
On January 21, 2008, we entered into an amendment (the “Amendment”) with Sellers to the Purchase Agreement. The Amendment extended the closing date under the Purchase Agreement to April 30, 2008 (prior to the Amendment, the closing date was scheduled to occur no later than January 31, 2008). The Amendment also provided that the $10.0 million deposit (the “Deposit”) previously paid by us to an escrow agent under the Purchase Agreement would be released to Sellers, and that the Deposit would be non-refundable to us except in connection with the voluntary and intentional default by Sellers in their obligations to be performed on the closing date. In the event the transaction closes, the Deposit will be credited toward the purchase price.

The Amendment conditioned the closing of the transactions under the Purchase Agreement on us arranging financing satisfactory to us in our sole discretion in order to fund the transaction. We are currently in the process of seeking an additional capital partner to complete this transaction. In the event that we do not find a suitable capital partner, it is anticipated that we will not close this transaction.
Future Development. On July 25, 2006, the Unified Port of San Diego Board of Commissioners and the City of Chula Vista approved a non-binding letter of intent with us, outlining the general terms of our development of a 1,500 to 2,000 room convention hotel in Chula Vista, California. The parties recently extended the termination date for the non-binding letter of intent to May 31, 2008, and the parties continue to discuss the terms under which we would develop and operate the convention hotel project. If the parties can reach a final agreement, such agreement would be subject to a number of closing conditions and approvals, including but not limited to approval by the California Coastal Commission. At this time, we are unable to predict whether such approvals would be forthcoming.
Our management is also considering other sites to locate future Gaylord Hotel properties. We have not made any commitments, received any government approvals or made any financing plans in connection with these development projects.
Opry and Attractions
The Grand Ole Opry. The Grand Ole Opry, which celebrated its 82 nd anniversary in 2007, is one of the most widely known platforms for country music in the world. The Opry features a live country music show with performances every Friday and Saturday night, as well as a Tuesday Night Opry on a seasonal basis. The Opry House, home of the Grand Ole Opry, seats approximately 4,400 and is located in the Opryland complex. The Grand Ole Opry moved to the Opry House in 1974 from its most famous home in the Ryman Auditorium in downtown Nashville.
Each week, the Grand Ole Opry is broadcast live to millions of country lifestyle consumers on terrestrial radio via WSM-AM. In addition, the Grand Ole Opry is broadcast weekly on television via the Great American Country network and CMT-Canada. The broadcast of the Grand Ole Opry is also streamed on the Internet via www.opry.com and www.wsmonline.com. The show has been broadcast since 1925 on WSM-AM, making it the longest running live radio program in the United States. The television broadcast schedule on the Great American Country network includes 52 weekly telecasts airing on Saturday nights at 8 p.m. EST and repeating a minimum of three times during the following week. The Grand Ole Opry produces a two hour show each week that is currently aired on 128 radio stations across the country through syndication of “America’s Grand Ole Opry Weekend,” which is distributed by Westwood One and also on the American Forces Radio Network. In October 2007, XM Radio began broadcasting live Tuesday, Friday, and Saturday night Opry performances, as well as encore broadcasts, on XM’s classic country music channel. In addition to performances by members, the Grand Ole Opry presents performances by many other country music artists.
Ryman Auditorium. The Ryman Auditorium, which was built in 1892 and seats approximately 2,300, is designated as a National Historic Landmark. The former home of the Grand Ole Opry, the Ryman Auditorium was renovated and re-opened in 1994 for concerts and musical productions. The Grand Ole Opry returns to the Ryman Auditorium periodically, most recently from November 2007 to February 2008. The Ryman Auditorium has been nominated for “Theatre of the Year” by Pollstar Concert Industry Awards from 2003 to 2007, winning the award in 2003 and 2004.
The General Jackson Showboat. We operate the General Jackson Showboat, a 300-foot, four-deck paddle wheel showboat, on the Cumberland River, which flows past the Gaylord Opryland complex in Nashville. Its Victorian Theatre can seat 600 people for banquets and 1,000 people for theater-style presentations. The showboat stages Broadway-style shows and other theatrical productions. The General Jackson is one of many sources of entertainment that Gaylord makes available to conventions held at Gaylord Opryland. During the day, it operates cruises, primarily serving tourists visiting Gaylord Opryland complex and the Nashville area.
Gaylord Springs Golf Links. Home to a Senior PGA Tour event from 1994 to 2003 and minutes from Gaylord Opryland, the Gaylord Springs Golf Links was designed by former U.S. Open and PGA Champion Larry Nelson. The 40,000 square-foot antebellum-style clubhouse offers meeting space for up to 500 guests.
The Wildhorse Saloon. Since 1994, we have owned and operated the Wildhorse Saloon, a country music performance venue on historic Second Avenue in downtown Nashville. The three-story facility includes a dance floor of approximately 2,000 square feet, as well as a restaurant and banquet facility that can accommodate up to 2,000 guests.
Corporate Magic. In March 2000, we acquired Corporate Magic, Inc., a company specializing in the production of creative and entertainment events in support of the corporate and meeting marketplace. We believe the event and corporate entertainment planning function of Corporate Magic complements the meeting and convention aspects of our Gaylord Hotels business.
WSM-AM. WSM-AM commenced broadcasting in 1925. The involvement of Gaylord’s predecessors with country music dates back to the creation of the radio program that became The Grand Ole Opry, which has been broadcast live on WSM-AM since 1925. WSM-AM is broadcast from the Gaylord Opryland complex in Nashville and has a country music format. WSM-AM is one of the nation’s “clear channel” stations, meaning that no other station in a 750-mile radius uses the same frequency for night time broadcasts. As a result, the station’s signal, transmitted by a 50,000 watt transmitter, can be heard at night in much of the United States and parts of Canada.
On July 21, 2003, we, through our wholly-owned subsidiary Gaylord Investments, Inc., sold the assets primarily used in the operations of WSM-FM and WWTN(FM) to Cumulus Broadcasting, Inc. for $62.5 million in cash, and we entered into a joint sales agreement with Cumulus for WSM-AM in exchange for approximately $2.5 million in cash. Under the joint sales agreement with Cumulus, Cumulus sells all of the commercial advertising on WSM-AM and provides certain sales promotion and billing and collection services relating to WSM-AM, all for a specified fee. The joint sales agreement has a term of five years and will expire on April 21, 2008.
Corporate and Other
Bass Pro. On May 31, 2007, we and our wholly owned subsidiary, Gaylord Hotels, Inc., completed the sale of all of our interest in Bass Pro Group, LLC (consisting of 43,333 common units) for a purchase price of $222.0 million pursuant to the terms of a Common Unit Repurchase Agreement, dated April 3, 2007. The purchase price was paid in cash in full at closing. Our Chief Executive Officer formerly served as a member of the board of managers of Bass Pro Group, LLC but resigned upon consummation of the sale. See “Non-Operating Results Affecting Net Income (Loss) — Income from Unconsolidated Companies” under Item 7, “Management’s Discussion and Analysis of Financial Condition and Result of Operations,” below for a discussion of the results of our investment in Bass Pro prior to the date of disposal. See “Non-Operating Results Affecting Net Income (Loss) — Other Gains and (Losses)” under Item 7, “Management’s Discussion and Analysis of Financial Condition and Result of Operations,” below for a discussion of the recognized gain on the sale of our interest in Bass Pro Group, LLC.
ResortQuest. Following the closing of the sale of our interest in Bass Pro Group, LLC, on May 31, 2007, our wholly-owned subsidiary, ResortQuest International, Inc. (“RQI”), completed the disposition of our ResortQuest Hawaii business through the sale of all of the equity interests of RQI Holdings, LLC (f/k/a RQI Holdings, Ltd.) and ResortQuest Real Estate of Hawaii, LLC (f/k/a ResortQuest Real Estate of Hawaii, Inc.) to Vacation Holdings Hawaii, Inc., an affiliated company of Interval International (“Vacation Holdings”), pursuant to the terms of a Stock Purchase Agreement dated as of April 18, 2007 (the “ResortQuest Hawaii Purchase Agreement”), by and among us, RQI, Vacation Holdings and Interval Acquisition Corp. The purchase price paid by Vacation Holdings was $109.1 million, prior to giving effect to a purchase price adjustment based on the working capital of the acquired entities as of the closing. The purchase price was paid in cash in full at closing. We retained our 19.9% ownership interest in RHAC Holdings, LLC and our 18.1% ownership interest in Waipouli Holdings LLC, as our ownership interests in these hotel ownership joint venture entities were excluded from this transaction.
Thereafter, on June 1, 2007, we and Gaylord Hotels entered into a Stock Purchase Agreement dated as of June 1, 2007 (the “ResortQuest Mainland Purchase Agreement”) with BEI-RZT Corporation, a subsidiary of Leucadia National Corporation (“BEI-RZT”). Pursuant to the terms of the ResortQuest Mainland Purchase Agreement, Gaylord Hotels completed the disposition of our ResortQuest Mainland business through the sale of all of the capital stock of RQI to BEI-RZT on June 1, 2007. The purchase price paid by BEI-RZT was $35.0 million, prior to giving effect to certain purchase price adjustments, including a purchase price adjustment based on the working capital of RQI as of the closing. The purchase price was paid by the delivery of a four-year promissory note in the principal amount of $8.0 million bearing interest at the annual rate of 10%, and the balance of the purchase price was paid in cash at closing. This promissory note was cancelled and deemed to be satisfied and paid in full in full satisfaction of the final purchase price adjustment payable by Gaylord to BEI-RZT, as described above.
As a result of the transactions described above, the results of operations of our ResortQuest business, net of taxes, are included in discontinued operations for all periods presented. See “Non-Operating Results Affecting Net Income (Loss) — Income (Loss) from Discontinued Operations, Net of Income Taxes” under Item 7, “Management’s Discussion and Analysis of Financial Condition and Result of Operations,” below for a discussion of the results of operations of our ResortQuest business.
Viacom and CBS. In May 2007 we settled a secured forward exchange contract related to our investment in approximately 5.5 million shares of Viacom Class B common stock (“Viacom Stock”) and 5.5 million shares of CBS Corporation Class B Common Stock (“CBS Stock”), which were received as the result of the sale of television station KTVT to CBS in 1999, the subsequent acquisition of CBS by Viacom in 2000, and the subsequent conversion of each outstanding share of Viacom Class B common stock into 0.5 shares of CBS Stock and 0.5 shares of Viacom Stock in 2006. The secured forward exchange contract, which we entered into in 2000, was designed to protect us against decreases in the combined fair market value of the Viacom Stock and CBS Stock, while providing for participation in increases in the combined fair market value. As a result of the settlement, we surrendered all of our shares of Viacom Stock and CBS Stock to an affiliate of Credit Suisse First Boston in full satisfaction of all obligations under the secured forward exchange contract.

Nashville Predators. On February 22, 2005, we concluded the settlement of litigation with the Nashville Hockey Club Limited Partnership (“NHC”), which owns the Nashville Predators NHL hockey team, over (i) NHC’s obligation to redeem our ownership interest, and (ii) our obligations under the Nashville Arena Naming Rights Agreement dated November 24, 1999. Under the Naming Rights Agreement, which had an original 20-year term, we were required to make annual payments to NHC, beginning at $2,050,000 in 1999 and with a 5% escalation each year thereafter, and to purchase a minimum number of tickets to Predators games each year. At the closing of the settlement, NHC redeemed all of our outstanding limited partnership units in the Predators pursuant to a Purchase Agreement dated February 22, 2005, effectively terminating our ownership interest in the Predators. In addition, the Naming Rights Agreement was cancelled pursuant to the Acknowledgment of Termination of Naming Rights Agreement.
As a part of the settlement, we made a one-time cash payment to NHC of $4 million and issued to NHC a 5-year, $5 million promissory note bearing interest at 6% per annum. The note is payable at $1 million per year for 5 years, with the final payment due on October 5, 2010. Our obligation to pay the outstanding amount under the note shall terminate immediately if, at any time before the note is paid in full, the Predators cease to be an NHL team playing its home games in Nashville, Tennessee.
In addition, pursuant to a Consent Agreement among us, the National Hockey League and owners of NHC, our Guaranty dated June 25, 1997 has been limited so that we are not responsible for any debt, obligation or liability of NHC that arises from any act, omission or circumstance occurring after the date of the Consent Agreement. As a part of the settlement, each party agreed to release the other party from any claims associated with this litigation.
Implementation of Strategic Direction
During the second quarter of 2001, we hired a new Chairman of the Board and a new Chief Executive Officer. Once the new senior management team was in place, they devoted a significant portion of 2001 to reviewing the many different businesses they inherited when they joined the Company. After significant review, it was determined that, while we had four business segments for financial reporting purposes (Hospitality, Opry and Attractions Group, Media, consisting of our radio stations and other media assets, and Corporate and Other), the future direction of the Company would be based on two core asset groups, which were aligned as follows: (i) Hospitality Core Asset Group: consisting of the Gaylord Hotels and the various attractions that provide entertainment to guests of the hotels; and (ii) Opry Core Asset Group: consisting of the Grand Ole Opry, WSM-AM radio, and the Ryman Auditorium.

Nashville Predators. On February 22, 2005, we concluded the settlement of litigation with the Nashville Hockey Club Limited Partnership (“NHC”), which owns the Nashville Predators NHL hockey team, over (i) NHC’s obligation to redeem our ownership interest, and (ii) our obligations under the Nashville Arena Naming Rights Agreement dated November 24, 1999. Under the Naming Rights Agreement, which had an original 20-year term, we were required to make annual payments to NHC, beginning at $2,050,000 in 1999 and with a 5% escalation each year thereafter, and to purchase a minimum number of tickets to Predators games each year. At the closing of the settlement, NHC redeemed all of our outstanding limited partnership units in the Predators pursuant to a Purchase Agreement dated February 22, 2005, effectively terminating our ownership interest in the Predators. In addition, the Naming Rights Agreement was cancelled pursuant to the Acknowledgment of Termination of Naming Rights Agreement.
As a part of the settlement, we made a one-time cash payment to NHC of $4 million and issued to NHC a 5-year, $5 million promissory note bearing interest at 6% per annum. The note is payable at $1 million per year for 5 years, with the final payment due on October 5, 2010. Our obligation to pay the outstanding amount under the note shall terminate immediately if, at any time before the note is paid in full, the Predators cease to be an NHL team playing its home games in Nashville, Tennessee.
In addition, pursuant to a Consent Agreement among us, the National Hockey League and owners of NHC, our Guaranty dated June 25, 1997 has been limited so that we are not responsible for any debt, obligation or liability of NHC that arises from any act, omission or circumstance occurring after the date of the Consent Agreement. As a part of the settlement, each party agreed to release the other party from any claims associated with this litigation.
Implementation of Strategic Direction
During the second quarter of 2001, we hired a new Chairman of the Board and a new Chief Executive Officer. Once the new senior management team was in place, they devoted a significant portion of 2001 to reviewing the many different businesses they inherited when they joined the Company. After significant review, it was determined that, while we had four business segments for financial reporting purposes (Hospitality, Opry and Attractions Group, Media, consisting of our radio stations and other media assets, and Corporate and Other), the future direction of the Company would be based on two core asset groups, which were aligned as follows: (i) Hospitality Core Asset Group: consisting of the Gaylord Hotels and the various attractions that provide entertainment to guests of the hotels; and (ii) Opry Core Asset Group: consisting of the Grand Ole Opry, WSM-AM radio, and the Ryman Auditorium.

CEO BACKGROUND

Colin V. Reed has served as President and Chief Executive Officer and a director of the Company since April 2001, and Mr. Reed was also elected Chairman of the Board of Directors of the Company in May 2005. Prior to joining the Company, Mr. Reed had served as a member of the three-executive Office of the President of Harrah’s Entertainment, Inc. since May 1999, and he had served as Harrah’s Chief Financial Officer since April 1997. Mr. Reed also was a director of Harrah’s from 1998 to May 2001. Mr. Reed served in a variety of other management positions with Harrah’s and its predecessor, Holiday Corp., since 1977. Mr. Reed is a director of First Horizon National Corporation.
David C. Kloeppel is the Company’s Executive Vice President and Chief Financial Officer. Prior to joining the Company in September of 2001, Mr. Kloeppel worked in the Mergers and Acquisitions Department at Deutsche Bank in New York, where he was responsible for that department’s activities in the lodging, leisure and real estate sectors. Mr. Kloeppel earned an MBA from Vanderbilt University’s Owen Graduate School of Management, graduating with highest honors. He received his bachelor of science degree from Vanderbilt University, majoring in economics. Mr. Kloeppel is currently a director of FelCor Lodging Trust, Inc.
John P. Caparella is Executive Vice President of the Company and Chief Operating Officer, Gaylord Hotels, positions he has held since February 10, 2006. Prior to such time, he served as Senior Vice President and General Manager of the Company’s Gaylord Palms Resort and Convention Center. Prior to joining the Company in November 2000, Mr. Caparella served as Executive Vice President, Planning, Development and Administration and President of PlanetHollywood.com for Planet Hollywood International, Inc., a creator and developer of entertainment-based consumer brands. Before joining Planet Hollywood in 1997, Mr. Caparella was with ITT Sheraton, an owner and operator of hotel brands, for 17 years in convention, resort, business and 4-star luxury properties, as well as ITT Sheraton’s corporate headquarters. Mr. Caparella graduated from the State University of New York at Delhi and has an MBA from Rollins College Crummer Graduate School of Business.
Carter R. Todd joined Gaylord Entertainment Company in July 2001 as the Company’s Senior Vice President, General Counsel and Secretary. Prior to that time, he was a Corporate and Securities partner in the Nashville office of the regional law firm Baker, Donelson, Bearman & Caldwell. Mr. Todd has practiced law in Nashville since 1982 and is a graduate of Vanderbilt University School of Law and Davidson College.
Rod Connor is the Senior Vice President and Chief Administrative Officer of the Company, a position he has held since September 2003. From January 2002 to September 2003, he was Senior Vice President of Risk Management and Administration. From December 1997 to January 2002, Mr. Connor was Senior Vice President and Chief Administrative Officer. From February 1995 to December 1997, he was the Vice President and Corporate Controller of the Company. Mr. Connor has been an employee of the Company for over 35 years. Mr. Connor, who is a certified public accountant, has a B.S. degree in accounting from the University of Tennessee.
Melissa J. Buffington is the Senior Vice President of Human Resources and Communications of the Company, a position she has held since August 2003. From 1999 until she joined the Company, Ms. Buffington was Senior Vice President of Human Resources and Strategic Planning for Dollar General Corp., where she oversaw all human resource programs. From 1996 to 1999, Ms. Buffington held the position of Executive Vice President of Human Resources at First American Corporation. From 1992 to 1996, Ms. Buffington was First American’s Senior Vice President and Director of Quality Management, and Director of Strategic Planning and Mergers and Acquisitions. Ms. Buffington is a graduate of The College of William and Mary, where she received her degree in business management. She earned her MBA with a concentration in finance from Old Dominion University.

MANAGEMENT DISCUSSION FROM LATEST 10K

We generate a significant portion of our revenues from our Hospitality segment. We believe that we are the only hospitality company focused primarily on the large group meetings and conventions sector of the lodging market. Our strategy is to continue this focus by concentrating on our “All-in-One-Place” self-contained service offerings and by emphasizing customer rotation among our convention properties, while also offering additional entertainment opportunities to guests and target customers.
Our concentration in the hospitality industry, and in particular the large group meetings sector of the hospitality industry, exposes us to certain risks outside of our control. General economic conditions, particularly national and global economic conditions, can affect the number and size of meetings and conventions attending our hotels. Recent events, including fallout from problems in the U.S. subprime mortgage market, indicate a potential near-term recession in the national economy. A recession or downturn in the national economy or in a region constituting a significant source of customers for any of our properties, or the public perception that a recession or downturn might occur, could result in fewer advance bookings, fewer transient customers visiting our properties, and/or guests spending less money at our properties, each of which could adversely affect our results of operations. While we believe that the large group customers that make up the core of our revenues are less susceptible to changes in economic conditions, there can be no assurance that a downturn in general economic conditions would not have an adverse effect on the Company’s results of operations.
Our business is also exposed to risks related to tourism, including terrorist attacks and other global events which affect levels of tourism in the United States and, in particular, the areas of the country in which our properties are located. Competition and the desirability of the locations in which our properties are located are also important risks to our business. See Item 1A, “Risk Factors,” above for additional discussion regarding the risk factors that could cause our actual results to differ from our expected or historical results.
Recent Developments
Bass Pro. On May 31, 2007, we and our wholly owned subsidiary, Gaylord Hotels, Inc., completed the sale of all of our interest in Bass Pro Group, LLC (consisting of 43,333 common units) for a purchase price of $222.0 million pursuant to the terms of a Common Unit Repurchase Agreement, dated April 3, 2007. The purchase price was paid in cash in full at closing. Our Chief Executive Officer formerly served as a member of the board of managers of Bass Pro Group, LLC but resigned upon consummation of the sale. See “Non-Operating Results Affecting Net Income (Loss) — Income from Unconsolidated Companies” below for a discussion of the results of our investment in Bass Pro prior to the date of disposal.
ResortQuest. Following the closing of the sale of our interest in Bass Pro Group, LLC, on May 31, 2007, our wholly-owned subsidiary, ResortQuest International, Inc. (“RQI”), completed the sale of all of the equity interests of RQI Holdings, LLC (f/k/a RQI Holdings, Ltd.) and ResortQuest Real Estate of Hawaii, LLC (f/k/a ResortQuest Real Estate of Hawaii, Inc.) to Vacation Holdings Hawaii, Inc., an affiliated company of Interval International (“Vacation Holdings”), pursuant to the terms of a Stock Purchase Agreement dated as of April 18, 2007 (the “ResortQuest Hawaii Purchase Agreement”), by and among us, RQI, Vacation Holdings and Interval Acquisition Corp. The purchase price paid by Vacation Holdings was $109.1 million, prior to giving effect to a purchase price adjustment based on the working capital of the acquired entities as of the closing. The purchase price was paid in cash in full at closing. We retained our 19.9% ownership interest in RHAC Holdings, LLC and our 18.1% ownership interest in Waipouli Holdings LLC, as our ownership interests in these hotel ownership joint venture entities were excluded from this transaction.
Thereafter, on June 1, 2007, we and Gaylord Hotels entered into a Stock Purchase Agreement dated as of June 1, 2007 (the “ResortQuest Mainland Purchase Agreement”) with BEI-RZT Corporation, a subsidiary of Leucadia National Corporation (“BEI-RZT”). Pursuant to the terms of the ResortQuest Mainland Purchase Agreement, Gaylord Hotels completed the sale of all of the capital stock of RQI to BEI-RZT on June 1, 2007. The purchase price paid by BEI-RZT was $35.0 million, prior to giving effect to certain purchase price adjustments, including a purchase price adjustment based on the working capital of RQI as of the closing. The purchase price was paid by the delivery of a four-year promissory note in the principal amount of $8.0 million bearing interest at the annual rate of 10%, and the balance of the purchase price was paid in cash at closing. This promissory note was cancelled and deemed to be satisfied and paid in full in full satisfaction of the final purchase price adjustment payable by Gaylord to BEI-RZT, as described above.
As a result of the transactions described above, the results of operations of our ResortQuest business, net of taxes, are included in discontinued operations for all periods presented. See “Non-Operating Results Affecting Net Income (Loss) — Income (Loss) from Discontinued Operations, Net of Taxes” below for a discussion of the results of operations of our ResortQuest business.
Key Performance Indicators
Hospitality Segment. The operating results of our Hospitality segment are highly dependent on the volume of customers and the quality of the customer mix at our hotels. These factors impact the price we can charge for our hotel rooms and other amenities, such as food and beverage and meeting space. Key performance indicators related to revenue are:
• hotel occupancy (volume indicator)

• average daily rate (“ADR”) (price indicator)

• Revenue per Available Room (“RevPAR”) (a summary measure of hotel results calculated by dividing room sales by room nights available to guests for the period)

• Total Revenue per Available Room (“Total RevPAR”) (a summary measure of hotel results calculated by dividing the sum of room, food and beverage and other ancillary service revenue by room nights available to guests for the period)

• Net Definite Room Nights Booked (a volume indicator which represents the total number of definite bookings for future room nights at Gaylord hotels confirmed during the applicable period, net of cancellations)
We recognize Hospitality segment revenue from rooms as earned on the close of business each day when a stay occurs. Revenues from food and beverage and retail sales are recognized at the time of sale. Revenues from other services at our hotels, such as spa, parking, and transportation services are recognized at the time services are provided. Almost all of our Hospitality segment revenues are either cash-based or, for meeting and convention groups meeting our credit criteria, billed and collected on a short-term receivables basis. Our industry is capital intensive, and we rely on the ability of our hotels to generate operating cash flow to repay debt financing, fund maintenance capital expenditures and provide excess cash flow for future development.
The results of operations of our Hospitality segment are affected by the number and type of group meetings and conventions scheduled to attend our hotels in a given period. We attempt to offset any identified shortfalls in occupancy by creating special events at our hotels to attract transient guests or offering incentives to groups in order to attract increased business during this period. A variety of factors can affect the results of any interim period, including the nature and quality of the group meetings and conventions attending our hotels during such period, which have often been contracted for several years in advance, and the level of transient business at our hotels during such period.

Overall Outlook
We have invested heavily in our operations in the years ended December 31, 2007, 2006 and 2005, primarily in connection with the continued construction and improvement of the Gaylord Texan after it opened in 2004 and the construction of the Gaylord National hotel project, described below, beginning in 2005 and continuing in 2006 and 2007. Our investments in the balance of 2008 are expected to consist primarily of ongoing capital improvements for our existing properties (particularly the expansions at Gaylord Opryland and Gaylord Texan) and the continued construction of the Gaylord National.
On February 23, 2005, we acquired approximately 42 acres of land and related land improvements in Prince George’s County, Maryland (located in the Washington D.C. area) for approximately $29 million, on which land we are developing a hotel to be known as the Gaylord National Resort & Convention Center. Approximately $17 million of this was paid in the first quarter of 2005, with the remainder payable upon completion of the project. The project was originally planned to include a 1,500 room hotel; however, we have expanded the planned hotel to a total of 2,000 rooms. In connection with this expansion, we will pay an additional $8 million for land improvements related to the expanded facility upon completion of the project. We currently expect to open the hotel in 2008.
Prince George’s County, Maryland has approved three bond issues related to the development of our hotel project. The first bond issuance, in the amount of $65 million, was issued by Prince George’s County, Maryland in April 2005 to support the cost of infrastructure being constructed by the project developer, such as roads, water and sewer lines. The second bond issuance, in the amount of $95 million, was issued by Prince George’s County, Maryland in April 2005 and placed into escrow until completion of the convention center and 1,500 rooms within the hotel, at which time the bonds will be released to us. In addition, on July 18, 2006, Prince George’s County, Maryland approved an additional $50 million of bonds, which will be issued to us upon completion of the entire project. We will initially hold the $95 million and $50 million bond issuances and receive the debt service thereon, which is payable from tax increment, hotel tax and special hotel rental taxes generated from our development.
We have entered into several agreements with a general contractor and other suppliers for the provision of certain construction services at the site. The agreement with the general contractor (the Perini/Tompkins Joint Venture) is with our wholly-owned subsidiary, Gaylord National, LLC, and provides for the construction of a portion of the Gaylord National hotel project in a guaranteed maximum price format. As of December 31, 2007, we had committed to pay $870.9 million under this agreement and the other agreements for construction services and supplies and other construction related costs ($97.9 million of which was outstanding as of such date). Construction costs to date have exceeded our initial estimates from 2004. A portion of these increased costs are attributable to: (a) construction materials price escalation that has occurred over the past three years; (b) increased cost of construction labor in the Washington, D.C. marketplace due to historically low unemployment and a high degree of construction activity; (c) our 500-room expansion and related additional meeting space, and the acceleration of its construction so that the expansion will open concurrently with the original project; and (d) enhancements to the project design. We have also reserved our rights with our general contractor and architect for possible claims concerning cost overruns. We currently estimate that the total cost of the project will be approximately $920 - $950 million, which includes the estimated construction costs for the expanded 2,000 room facility and excludes approximately $72 million in capitalized interest, approximately $48 million in pre-opening costs and the governmental economic incentives. As of December 31, 2007, we have spent approximately $721.7 million (excluding capitalized interest and pre-opening costs) on the project. We intend to use proceeds of our $1.0 billion credit facility, cash flow from operations, and after completion, the proceeds of tax increment payments on the $145 million in government bonds described above, to fund the development and construction.
On July 25, 2006, the Unified Port of San Diego Board of Commissioners and the City of Chula Vista approved a non-binding letter of intent with us, outlining the general terms of our development of a 1,500 to 2,000 room convention hotel in Chula Vista, California. The parties recently extended the termination date for the non-binding letter of intent to May 31, 2008, and the parties continue to discuss the terms under which we would develop and operate the convention hotel project. If the parties can reach a final agreement, such agreement would be subject to a number of closing conditions and approvals, including but not limited to approval by the California Coastal Commission. At this time, we are unable to predict whether such approvals would be forthcoming.
With respect to our existing properties, we expect to commence expansion projects at both Gaylord Opryland and Gaylord Texan in late 2008 or early 2009. The city of Nashville has approved an $80 million bond issue in connection with our planned expansion at Gaylord Opryland, which would add approximately 400 guest rooms, a significant amount of new meeting facilities and additional parking. The planned expansion at Gaylord Texan would add approximately 500 guest rooms, approximately 200,000 square feet of additional meeting and prefunction space and additional leisure amenities, including an outdoor resort pool. Significant components of the proposed Gaylord Texan expansion are subject to, among other things, approval by the U.S. Army Corps of Engineers, which has not yet been obtained.

We entered into an Agreement of Purchase and Sale dated as of November 19, 2007 (the “Purchase Agreement”) with LCWW Partners, a Texas joint venture, and La Cantera Development Company, a Delaware corporation (collectively, “Sellers”), to acquire the assets related to the Westin La Cantera Resort, located in San Antonio, Texas (the “La Cantera Resort”), as well as approximately 90 acres of undeveloped land adjacent thereto.
The purchase price payable by us under the Purchase Agreement is $252.5 million, payable in cash at closing, which amount is subject to certain adjustments at closing. In addition, we will be required to pay a termination fee in an amount not to exceed $3.3 million at closing in connection with the termination of the current management agreement for the La Cantera Resort.
On January 21, 2008, we entered into an amendment (the “Amendment”) with Sellers to the Purchase Agreement. The Amendment extended the closing date under the Purchase Agreement to April 30, 2008 (prior to the Amendment, the closing date was scheduled to occur no later than January 31, 2008). The Amendment also provided that the $10.0 million deposit (the “Deposit”) previously paid by us to an escrow agent under the Purchase Agreement would be released to Sellers, and that the Deposit would be non-refundable to us except in connection with the voluntary and intentional default by Sellers in their obligations to be performed on the closing date. In the event the transaction closes, the Deposit will be credited toward the purchase price.
The Amendment conditioned the closing of the transactions under the Purchase Agreement on us arranging financing satisfactory to us in our sole discretion in order to fund the transaction. We are in the process of seeking an additional capital partner to complete this transaction. In the event that we do not find a suitable capital partner, it is anticipated that we will not close this transaction.
We are also considering other potential hotel sites throughout the country. The timing and extent of any of these development projects is uncertain, and we have not made any commitments, received any government approvals or made any financing plans in connection with these development projects.
On February 7, 2008, we announced that our board of directors approved a stock repurchase program to repurchase up to $80 million of our common stock. This program is intended to be implemented through purchases made from time to time in the open market in accordance with applicable Securities and Exchange Commission requirements. The timing, prices and sizes of purchases will depend upon prevailing stock prices, general economic and market conditions and other considerations. The repurchase program does not obligate us to acquire any particular amount of common stock and the repurchase program may be suspended at any time at our discretion.

2007 Results As Compared to 2006 Results
The increase in our total revenues and total operating expenses in the twelve months ended December 31, 2007, as compared to the same period in 2006, was due primarily to increased Hospitality operating segment revenues and operating expenses, as more fully described below.
These increased revenues and operating expenses, combined with a $10.3 million increase in preopening costs described below, resulted in operating income of $43.2 million for 2007, as compared to operating income of $43.6 million in the same period in 2006. Despite our stable operating income in 2007, as compared to 2006, our net income increased $191.3 million in 2007 (as compared to 2006) due to the following factors, each as described more fully below:
• Other gains and losses of $146.3 million in 2007, as compared to other gains and losses of $3.3 million in 2006, primarily relating to the gain on the sale of our interest in Bass Pro Group, LLC, which served to increase our net income by $143.0 million in 2007 as compared to 2006.

• A gain on discontinued operations, net of taxes, of $9.9 million in 2007, as compared to a loss on discontinued operations, net of taxes, of $84.2 million in 2006, related primarily to the operations and disposition of our ResortQuest business, which served to increase our net income by $94.1 million in 2007 as compared to 2006.

• Interest expense of $38.5 million in 2007, as compared to interest expense of $72.5 million in 2006, primarily as a result of increased capitalized interest during 2007, which served to increase our net income by $34.0 million in 2007 as compared to 2006.

• A provision for income taxes of $62.7 million in 2007, as compared to a provision for income taxes of $4.0 million in 2006, which served to decrease our net income by $58.7 million in 2007 as compared to 2006.

• The recognition of a net unrealized gain on our investment in Viacom and CBS stock and the related secured forward exchange contract of $9.5 million in 2007, as compared to a net unrealized gain of $21.7 million in 2006, which served to reduce our net income by $12.2 million in 2007 as compared to 2006.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

We generate a substantial portion of our revenues from our Hospitality segment. We believe that we are the only hospitality company whose stated primary focus is on the large group meetings and conventions sector of the lodging market. Our strategy is to continue this focus by concentrating on our “All-in-One-Place” self-contained service offerings and by emphasizing customer rotation among our convention properties, while also offering additional entertainment opportunities to guests and target customers.
Our concentration in the hospitality industry, and in particular the large group meetings sector of the hospitality industry, exposes us to certain risks outside of our control. General economic conditions, particularly national and global economic conditions, can affect the number and size of meetings and conventions attending our hotels. Recent events, including fallout from problems in the U.S. subprime mortgage market, have resulted in recessionary or near-recessionary conditions in the national economy. A recession or downturn in the national economy or in a region constituting a significant source of customers for any of our properties, or the public perception that a recession or downturn might occur, could result in fewer advance bookings, fewer transient customers visiting our properties, and/or guests spending less money at our properties, each of which could adversely affect our results of operations. While we believe that the large group customers that make up the core of our revenues are less susceptible to changes in economic conditions, there can be no assurance that continued softness in the national economy would not have an adverse effect on the Company’s results of operations.
Our business is also exposed to risks related to tourism, including terrorist attacks and other global events which affect levels of tourism in the United States and, in particular, the areas of the country in which our properties are located. Competition and the desirability of the locations in which our properties are located are also important risks to our business. See Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2007, filed with the SEC on February 28, 2008, for additional discussion regarding the risk factors that could cause our actual results to differ from our expected or historical results.
Recent Developments
Refinancing of $1.0 Billion Credit Facility. On July 28, 2008, we announced that we entered into a new $1.0 billion senior secured credit facility that will be available to fund the Company’s business plan. See “Liquidity and Capital Resources – Principal Debt Agreements” below for a complete description of the terms of the new $1.0 billion senior secured credit facility.
Termination of Purchase Agreement for Westin La Cantera Resort. We entered into an Agreement of Purchase and Sale dated as of November 19, 2007 (the “Purchase Agreement”) with LCWW Partners, a Texas joint venture, and La Cantera Development Company, a Delaware corporation (collectively, “Sellers”), to acquire the assets related to the Westin La Cantera Resort, located in San Antonio, Texas (the “La Cantera Resort”). The Purchase Agreement also provided for our purchase of approximately 90 acres of undeveloped land adjacent to the resort property.
On January 21, 2008, we entered into an amendment (the “Amendment”) with Sellers to the Purchase Agreement. The Amendment extended the closing date under the Purchase Agreement to April 30, 2008 (prior to the Amendment, the closing date was scheduled to occur no later than January 31, 2008). The Amendment also provided that the $10.0 million deposit (the “Deposit”) previously paid by us to an escrow agent under the Purchase Agreement would be released to Sellers, and that the Deposit would be non-refundable to us except in connection with the voluntary and intentional default by Sellers in their obligations to be performed on the closing date.
The Amendment conditioned the closing of the transactions under the Purchase Agreement on us arranging financing satisfactory to us in our sole discretion in order to fund the transaction. On April 15, 2008, as permitted by the Amendment, we terminated the Purchase Agreement on the basis that we did not obtain financing satisfactory to us. Pursuant to the terms of the Purchase Agreement and the Amendment, we forfeited the $10.0 million deposit previously paid to Sellers. As a result, we recorded an impairment charge of $12.0 million to write off the deposit, as well as certain transaction-related expenses that were also capitalized in connection with the potential acquisition.
Key Performance Indicators
The operating results of our Hospitality segment are highly dependent on the volume of customers at our hotels and the quality of the customer mix at our hotels. These factors impact the price we can charge for our hotel rooms and other amenities, such as food and beverage and meeting space. Key performance indicators related to revenue are:
• hotel occupancy (volume indicator);

• average daily rate (“ADR”) (price indicator);

• Revenue per Available Room (“RevPAR”) (a summary measure of hotel results calculated by dividing room sales by room nights available to guests for the period);

• Total Revenue per Available Room (“Total RevPAR”) (a summary measure of hotel results calculated by dividing the sum of room, food and beverage and other ancillary service revenue by room nights available to guests for the period); and • Net Definite Room Nights Booked (a volume indicator which represents the total number of definite bookings for future room nights at Gaylord hotels confirmed during the applicable period, net of cancellations);
We recognize Hospitality segment revenue from rooms as earned on the close of business each day and from concessions and food and beverage sales at the time of sale. Almost all of our Hospitality segment revenues are either cash-based or, for meeting and convention groups meeting our credit criteria, billed and collected on a short-term receivables basis. Our industry is capital intensive, and we rely on the ability of our hotels to generate operating cash flow to repay debt financing, fund maintenance capital expenditures and provide excess cash flow for future development.
The results of operations of our Hospitality segment are affected by the number and type of group meetings and conventions scheduled to attend our hotels in a given period. We attempt to offset any identified shortfalls in occupancy by creating special events at our hotels or offering incentives to groups in order to attract increased business during this period. A variety of factors can affect the results of any interim period, including the nature and quality of the group meetings and conventions attending our hotels during such period, which meetings and conventions have often been contracted for several years in advance, the level of attrition we experience, and the level of transient business at our hotels during such period.
Overall Outlook
We have invested heavily in our operations in the three and six months ended June 30, 2008 and in the years ended December 31, 2007, 2006 and 2005, primarily in connection with the continued construction and improvement of the Gaylord Texan after it opened in 2004, and the construction of the Gaylord National, described below, beginning in 2005 and continuing in 2006, 2007 and 2008. Our investments in the balance of 2008 are expected to consist primarily of ongoing capital improvements for our existing properties and the construction closeout of the Gaylord National.
On February 23, 2005, we acquired approximately 42 acres of land and related land improvements in Prince George’s County, Maryland (located in the Washington D.C. area) for approximately $29 million, on which land we have developed Gaylord National. The hotel was substantially completed and opened in April 2008. Approximately $17 million of the cost of the land was paid in the first quarter of 2005, and an additional $2 million was paid upon substantial completion of Gaylord National in April 2008. The remaining $10 million of the cost of the land, which is subject to downward adjustment based on the completion of certain development milestones, is expected to be paid within the next nine to twelve months. The project was originally planned to include a 1,500 room hotel; however, we expanded the planned hotel to a total of 2,000 rooms. In connection with this expansion, we paid an additional $8 million in April 2008 for land improvements related to the expanded facility.
Prince George’s County, Maryland has issued three series of bonds related to the development of our hotel project. The first bond issuance, with a face value of $65 million, was issued by Prince George’s County, Maryland in April 2005 to support the cost of infrastructure being constructed by the project developer, such as roads, water and sewer lines. The second bond issuance, with a face value of $95 million (“Series A Bond”), was issued by the County in April 2005 and placed into escrow until substantial completion of the convention center and 1,500 rooms within the hotel. The Series A Bond and the third bond issuance, with a face value of $50 million (“Series B Bond”), were delivered to us upon substantial completion and opening of the Gaylord National on April 2, 2008. We are currently holding the Series A Bond and Series B Bond and receiving the debt service thereon, which is payable from tax increment, hotel tax and special hotel rental taxes generated from the development. Accordingly, during the second quarter of 2008, we recorded a note receivable and offset to property and equipment in the amount of $150.4 million. We also recorded interest income of $3.0 million during the three months and six months ended June 30, 2008 for the interest that accrued on these bonds subsequent to their delivery to us.

We have entered into commitments for various expenditures in connection with our Gaylord National development, including for the purchase of land, furniture, fixtures, and equipment, and procuring services in connection with the development. We have entered into several agreements with a general contractor and other suppliers for the provision of certain construction services at the site. The agreement with the general contractor (the Perini/Tompkins Joint Venture) is with our wholly-owned subsidiary, Gaylord National, LLC, and provides for the construction of a portion of the Gaylord National hotel project in a guaranteed maximum price format. Construction costs to date have exceeded our initial estimates from 2004. A portion of these increased costs are attributable to: (a) construction materials price escalation that has occurred over the past four years; (b) increased cost of construction labor in the Washington, D.C. marketplace due to historically low unemployment and a high degree of construction activity; (c) our 500-room expansion and related additional meeting space, and the acceleration of its construction so that the expansion opened concurrently with the original project; and (d) enhancements to the project design. We have also reserved our rights with our general contractor and architect for possible claims concerning cost overruns. As of June 30, 2008, we have spent approximately $936.9 million (excluding $66.1 million of capitalized interest and $48.6 million in pre-opening costs) on the project and have accrued an additional $97.1 million. We anticipate we may receive additional billings as well as proposed change orders from the general contractor for additional costs. We intend to vigorously negotiate any such proposed changes with the general contractor to minimize any cost increases.
On July 25, 2006, the Unified Port of San Diego Board of Commissioners and the City of Chula Vista approved a non-binding letter of intent with us, outlining the general terms of our development of a 1,500 to 2,000 room convention hotel in Chula Vista, California. The parties recently extended the termination date for the non-binding letter of intent to December 31, 2008, and the parties continue to discuss the terms under which we would develop and operate the convention hotel project. If the parties can reach a final agreement, such agreement would be subject to a number of closing conditions and approvals, including but not limited to approval by the California Coastal Commission. At this time, we are unable to predict whether such approvals would be forthcoming.
We are also considering expansions at Gaylord Opryland, Gaylord Texan, and Gaylord Palms.
We are also considering other potential hotel sites throughout the country. The timing and extent of any of these development projects is uncertain, and we have not made any commitments, received any government approvals or made any financing plans in connection with these development projects.
On February 7, 2008, we announced that our board of directors approved a stock repurchase program to repurchase up to $80 million of our common stock. This program is intended to be implemented through purchases made from time to time in the open market in accordance with applicable SEC requirements. The timing, prices and sizes of purchases will depend upon prevailing stock prices, general economic and market conditions and other considerations. The repurchase program does not obligate us to acquire any particular amount of common stock and the repurchase program may be suspended at any time at our discretion. During the three months and six months ended June 30, 2008, we repurchased 0 and 656,700 shares, respectively, of our common stock at a weighted average purchase price of $30.42 per share.

Summary Financial Results
Results

Total Revenues
The increase in our total revenues for the three and six months ended June 30, 2008, as compared to the three and six months ended June 30, 2007, is attributable to an increase in our Hospitality segment revenues (an increase of $65.2 million for the three months, and an increase of $76.7 million for the six months, ended June 30, 2008, as compared to the same periods in 2007), primarily due to the opening of the Gaylord National in April 2008, as well as other factors, which are described more fully below.
Total Operating Expenses
The increase in our total operating expenses for the three and six months ended June 30, 2008, as compared to the three and six months ended June 30, 2007, is primarily due to increased Hospitality segment operating expenses primarily associated with the Gaylord National, as well as other factors, which are described more fully below.
Operating expenses for the six months ended June 30, 2008, as compared to the same period in 2007, were also impacted by a $12.6 million increase in preopening costs for the period, primarily associated with the Gaylord National, and $12.0 million in impairment and other charges incurred in the first quarter of 2008 related to the termination of the Purchase Agreement for the La Cantera Resort, each as more fully described below.
Operating Income
The increase in our operating income for the three months ended June 30, 2008, as compared to the same period in 2007, was due primarily to the improved Hospitality segment operating income (an increase of $8.3 million for the three months ended June 30, 2008, as compared to the same period in 2007), described below.
The decrease in our operating income for the six months ended June 30, 2008, as compared to the same period in 2007, was due primarily to the increased preopening costs and impairment and other charges incurred in the first quarter of 2008, as described above. A $16.3 million increase in Hospitality segment operating income for the six months ended June 30, 2008, as compared to the same period in 2007, served to offset the impact of such items.

Net Income
Although we experienced the increase in operating income described above for the three months ended June 30, 2008, as compared to the same period in 2007, our net income for the period decreased by $98.1 million, primarily due to the following factors:
• A $140.2 million decrease in our other gains and losses for the three months ended June 30, 2008, as compared to the same period in 2007, due primarily to the non-recurring pre-tax gain on the sale of our investment in Bass Pro in 2007, more fully described below, which served to decrease our net income.

• A $13.0 million decrease in our gain from discontinued operations for the three months ended June 30, 2008, as compared to the same period in 2007, due primarily to the non-recurring gain on the sale of our ResortQuest business and the results of our ResortQuest business prior to its sale in 2007, described more fully below, which served to decrease our net income.

• A $4.9 million increase in our interest expense, net of amounts capitalized, for the three months ended June 30, 2008, as compared to the same period in 2007, described more fully below, which served to decrease our net income.

• A $54.5 million decrease in our provision for income taxes for the three months ended June 30, 2008, as compared to the same period in 2007, described more fully below, which served to increase our net income.
The $108.8 million reduction in our net income for the six months ended June 30, 2008, as compared to the same period in 2007, was primarily due to a combination of our decreased operating income for the period, described above, and the following factors:
• A $146.0 million decrease in our other gains and losses for the six months ended June 30, 2008, as compared to the same period in 2007, due primarily to the non-recurring pre-tax gain on the sale of our investment in Bass Pro in 2007, more fully described below, which served to decrease our net income.

• A $16.3 million decrease in our gain from discontinued operations for the six months ended June 30, 2008, as compared to the same period in 2007, due primarily to the non-recurring gain on the sale of our ResortQuest business and the results of our ResortQuest business prior to its sale in 2007, described more fully below, which served to decrease our net income.

• A $59.7 million decrease in our provision for income taxes for the six months ended June 30, 2008, as compared to the same period in 2007, described more fully below, which served to increase our net income.

• A $10.3 million decrease in our interest expense, net of amounts capitalized, for the six months ended June 30, 2008, as compared to the same period in 2007, described more fully below, which served to increase our net income.
Our net income per share for the three and six months ended June 30, 2008, as compared to the same periods in 2007, was impacted by the reduction in the number of shares of our common stock outstanding due to our stock repurchase program described above.
Factors and Trends Contributing to Operating Performance • The opening of Gaylord National in April 2008, which produced revenues and operating income of $61.8 million and $5.7 million, respectively, for both the three months and six months ended June 30, 2008.

• Improved Hospitality segment revenues (excluding Gaylord National) for the three and six months ended June 30, 2008, as compared to the same periods in 2007, resulting in part from increased ADR partially offset by lower system-wide occupancy rates for these periods. The increased average daily rate was primarily a result of higher-paying group business during the period. The lower system-wide occupancy rates were partially due to certain groups at Gaylord Opryland, Gaylord Palms, and Gaylord Texan not fulfilling the minimum number of room nights originally contracted.

• Increased levels of food and beverage, banquet and other ancillary revenues in the Hospitality segment (excluding Gaylord National) for the six months ended June 30, 2008, as compared to the same period in 2007, which increased Total RevPAR and supplemented the impact of increased ADR and RevPAR of the Hospitality segment during this period, as discussed more fully below. Food and beverage, banquet, and other ancillary revenues in the Hospitality segment (excluding Gaylord National) decreased slightly during the three months ended June 30, 2008, as compared to the same period in 2007,

• Increased collection of attrition and cancellation fees at Gaylord Opryland, Gaylord Palms, and Gaylord Texan for the three and six months ended June 30, 2008, as compared to the same periods in 2007, which increased revenue and Total RevPAR at these properties during these periods, as discussed more fully below. Attrition and cancellation fees are charged to groups when they do not fulfill the number of room nights or minimum food and beverage spending requirements originally contracted. These fees are recognized as revenue in the period they are collected.

• Increased preopening costs for the six months ended June 30, 2008, as compared to the same period in 2007, associated with construction of the Gaylord National, described more fully below, which decreased our operating income as compared to the same period in 2007.

• Impairment charges of $12.0 million associated with the termination of the Purchase Agreement with respect to the La Cantera Resort, described more fully below, which decreased our operating income for the six months ended June 30, 2008, as compared to the same period in 2007.

CONF CALL

Carter Todd

Good morning. My name is Carter Todd and I am the General Counsel and Senior Vice President for Gaylord Entertainment Company. Thank you for joining us today on our second quarter 2008 earnings call.

You should be aware that this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including statements among others regarding Gaylord Entertainment’s expected future financial performance. For this purpose any statements made during this call that are not statements of historical fact maybe deemed to be forward-looking statements. Without limiting the foregoing words such as believes, anticipates, plans, and expects and similar expressions are intended to identify forward-looking statements.

You are hereby cautioned that these statements maybe affected by the important factors among others set forth in Gaylord Entertainment’s filings with the Securities and Exchange Commission and in our second quarter 2008 earnings release. Consequently actual operations and results may differ materially from the results discussed or projected in the forward-looking statements. Gaylord Entertainment undertakes no obligation to update publicly any forward-looking statements, whether as the result of new information, future events or otherwise.

I would also like to remind you that in our call today, we will discuss certain non-GAAP financial measures and a reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures has been provided as an exhibit to our earnings release and is also available on our website under the Investor Relations section.

At this time, I would like to turn the call over to our Chairman and Chief Executive Officer, Colin Reed.

Colin Reed

Thanks, Todd and good morning everyone. I am happy to welcome all of you to our second quarter 2008 conference call. As I do every quarter, I will begin by offering some color on our business and the Hospitality Industry before David Kloeppel, our Chief Financial Officer elaborates on the financial results of the quarter and the company's outlook for the rest of the year. We will then turn over to Q&A and hopefully answer all of your questions and the conclusions.

We have been very busy these last few months and our efforts have translated into meaningful progress for our company. Before Dave and I talk about all of that though, I am going to try and preempt some of your questions by giving you my impression of the current market situation and how it is affecting our business.

I have been in the hospitality business for many years now. During that time I have watched the industry turn upside down multiple times. That being said, the current pressures on the market are different today than anything I have ever seen before and this year has certainly been worse than last. Because of this, looking at year-over-year comps will have very little meaning. Instead, I believe that it is important to analyze a company by its ability to adapt and adjust quickly, its ability to continue to build on a strategy no matter the market conditions and its ability to grow profitability even in a poor business environment.

If you analyze Gaylord and our financial results this quarter in the context to these categories, you will find a business that is doing pretty well. More importantly, you will find a model that is unlike any other in the industry and set of assets both tangible and intangible, we are very well positioned for long-term growth. That said, we certainly not immune to the current issues facing the hospitality industry and the broader economy. This is clear by our RevPAR results for the quarter.

However, as I pointed out to you many, many times before because of the nature of our business, you cannot measure the profitability and health of us, by looking at this metric. This quarter's results are a fine example of this. So much of our business is entered into with large groups. We commit through contracts to deliver a specific number of room nights and in most cases large chunks of food and beverage revenue.

In normal times, we tend to see minimum attrition and for the sake of those of who are you new to our story, attrition is the name we gave to the difference between the room block that is contracted for, compared to the number of customers who actually arrive.

Over the last several months, we have witnessed a modest spike in attrition in some groups and this would not be good, if we did not have contracts. When groups turnout with less folks and they bargain for, several things happen. One, our hotel's RevPAR is negatively affected by this, and also the folks, who did not arrive, obviously are not consumers of our wonderful products.

So, our total RevPAR also is negatively affected by the loss of this gross revenue. However, there is a partial total RevPAR positive, which is the attrition payment we have received from the groups, who underperform and to confirm what I have told you many times before, we book attrition payments, when we actually receive them. It is for this reason, as second quarter looks the way it does, with modest growth in RevPAR and total RevPAR, the decent growth in our same-store consolidated cash flow. Dave will go into this, in a little bit more detail in a minute.

So, the logical question from here would be what does this mean for the rest of the year? As we were described to you at our Investor Day, the risks in our business are in the form of increased attrition and decreased transient business. Since we have no assurance of continued solid transient business, and we expect to see continued attrition levels, we have pulled back our RevPAR and total RevPAR guidance for the year, but essentially held as CCF guidance because of the way our model works.

Now over the last couple of years when times were good, certain analysts have inferred our strategy gives us a disadvantage, when so much of that business is pre-booked literally years in advance in contract form with pre-agree to room rates. Their hypothesis is that when we go into a given year with 50 to 60 points of occupancy already pre-booked and pre-priced, was somewhat disadvantage because we cannot re-price those rooms by taking advantage of spikes in demand.

Now personally speaking, I like the less volatile nature of our strategy, and I am hopeful it will become more understood and appreciated as the country navigates this current economic mess. Again, our model is working the way it is suppose to, and at the end of the day, our bookings remain strong, and meetings and convention groups continue to fill our hotels regularly. As a matter of fact, we have more room nights booked for future years at this time, than we did at the same time last year.

Additionally, while same-store room night production was down slightly relative to last year at this time was still well on pace to reach our guidance for the year of 1.3 million to 1.4 million room nights on the same-store basis. Also to put this first half booking performance into a greater perspective, this first half's room night production was about 20,000 room night shy of being a second best first half on record. Importantly, what also gives me confidence, as we look ahead to the rest of the year and into 2009, is that we have record number of tentative and prospect room nights that we are working with at the end of the second quarter.

Before we move on, let me give you just one more fact pertaining to attrition. As I said, attrition is not compared to what we are custom to seeing. At this time last year, attrition rates were about 8%. However, it is still in a reasonable range this quarter at 10% and the cancellation rates also remain relatively low.

Let me comment on the trends in business, because of some of the new programs we have implemented during this last year, we have seen an uptick in transient business, which I am sure is quite different from what you are likely hearing from other hotel companies. You should keep in mind, however that this segment represents only a small portion of that business and though it was a solid performer this quarter, it is not something that is overly critical to our overall strategy.

Now what else helps us achieve strong profitability measures in this market, while others in the industry are scrambling to fill enormous hotels with leisure guests, with short-term booking cycles, catering to group business that books years in advance, provides us with an incredible window into the near-term future occupancy of our hotels.

This visibility is critical to our efforts to run efficient operations. We are able to accurately project the appropriate results and staffing levels we need to operate our hotels, without ever compromising the superior service we promise to our guest. Over the last several years, we have constantly referenced the introduction of systems, that help us manage cost and this is paying off. This contributed to the CCF margin growth, you saw this quarter and we are quite pleased with the success of our efforts here.

Now this brings me to my next point. Many people in this industry think hotel brands are all about physical buildings and the amenities that are added. The problem with this approach is that most physical things in this industry get copied sooner or later, and in fact brands that operate like this are constantly reacting to what their competitors are doing. This is not bad in good times, but at last it is pretty bad in bad times. Brands, who do well irrespective of the environment, tend to possess several attributes. In most cases, they tend to be the employer of choice, in other words, they employ the best people as well as have a strong internal culture that is focused to the customer.

While we at Gaylord can talk about, how we can put together the right contracts, and how we can track and sign our resources according to demand, none of this works unless you can build a culture, that strives to achieve perfection with every event and every guest interaction. This is the culture that we built at Gaylord and it is special. If you attach evaluation to our company that is based solely on the value of our bricks and mortar assets and I believe you are selling it short.

You know why do I tell you this, in times like these, brands who strategy are based on product, which is then copied by competitors have no defense, when their competitors start slashing prices. It is my belief customers tend to be more loyal to businesses, who sustainably deliver more value to them. We said this on many occasions in the past. Value is not price.

When our convention customers stay with us for 3 or 4 more days, every single interaction that our people have with our customers, determine the outcome of the visit and our unique culture makes it highly likely our customers leave happy and anxious to return. That is why we are constantly able to attract high quality, high margin groups, and we are constantly turning down room nights across our network. However, of course, our exceptional facilities do play a role in this.

I know many of who you joined us at the Gaylord National in June for our Annual Analyst event. Working the host, I could not help that feel a great feel of pride knowing the Gaylord National have so quickly become the leading convention hotel in the East Coast. The 1.5 million room nights already on the books certainly backs that up.

Before I turn over to Dave, let me just speak briefly about how we are looking at growth. In this respect, let me quickly touch one two points. The first being capital. Hopefully by now, you will have read our release of last week, when we announced a new bank facility, which is essentially extended maturity out 2012 for modest increase in pricing. This speaks volumes for the relationships we have with our banks and is a stark contrast from other announcements made recently by companies, who are struggling to secure capital in these very difficult times.

The second, we continue to work on our expansion plans, but being very careful in overly committing serious capital until we see evidence that things are moving back towards more normalized business environment. Of course, any capital intensive projects will need to meet or exceed the high hurdle rates; we have put in place in order for these deals to move forward.

In closing, it continues to be the responsibility of this management team to get us through this messy market environment, and we believe that we have the right model and the right pieces in place to do just that.

So, that is it Dave. I believe we are ready for you to take us through the financial results for the quarter.

David Kloeppel

Thanks, Colin. As it is customary on our quarterly calls, I am going to review the financial performance of our business in each of the Gaylord properties. However, before I jump into those numbers, let me provide some additional detail on key trends in our businesses that Colin touched on, and we are referenced in our press release issued earlier this morning.

It is been a busy first half of the year for Gaylord. We opened the Gaylord National, and the property is very quickly settled into being the best convention hotel on the Eastern Seaboard. Additionally, we refinanced our bank debt through new bank facilities announced last week. We believe our ability to replace our existing facility and extend our maturity debt in this kind of a credit market has quite endorsement by our lenders as the strength of our business model from their perspective.

At the same time, we continue to deliver positive bottom line results, in an increasingly difficult environment for hospitality. Same-store CCF increased 8.2% this quarter, over the same period last year, while same-store revenues increased by 2%. So, we were successful in expanding margins 190 basis points and delivering profit inline with our expectations and above the guidance, we provided six weeks ago, on our Investor Day, despite modest RevPAR growth of only 0.3%.

More specifically, the drivers of this quarter's same-store CCF results were threefold. First, attrition and cancellation fee collections were up about $1.6 million over the prior year quarter. This increase in fee collection is the expected byproduct of the increased attrition we have been experiencing here to-date. As you all know as we have discussed at length of the Investor Day, we only book attrition revenues at the time they are collected.

Second, the second driver of this quarter’s performance was a 5.4% increase in same-store ADR and an approximately 19.4% increase in transient room nights. These more than offset a 3.8 point drop in occupancy. Third, our near-term visibility into group occupancy along with the systems we have put in place over the past 12 months better enable us to manage our properties efficiently, ensuring lean operations and the appropriate staffing levels according to current demand.

Bottom line, is that the large group centric model we built, which is far different from any other in the hospitality industry is functioning the way its suppose to. On the books, group revenue maybe a risk from time to time from attrition, but profitability does not have that same level of risk. Thanks to the contractual agreements, we have in placed with our group customers.

When we discussed our outlook on the balance of the year of the Investor Day, we described three areas of risk for the business. Attrition and cancellation levels, in the year booking trends, and transient business, so let me provide some color on each one of these items that we have discussed just a few weeks ago.

As you know the majority of our occupancy is booked years in advance, with contracts guarantying that we receive a portion of our anticipated revenue through attrition payments. As we discussed at the Investor Day, we have experienced a material increase in attrition rates in the first half of this year, because of the way we account for attrition and cancellation fees, higher attrition levels will impact RevPAR results, since fewer guests than expected are occupying our rooms.

However, we still receive attrition and cancellation fees, which are accounted for as other revenue. This means that RevPAR CCF are not impacted in the same way. This is why RevPAR, while an important metric for other hotel companies in the industry, does not fully gauge our success, especially in the market, while we are seeing attrition rate above recent historical levels.

Attrition at our same-store properties this quarter was about 10%, as compared to 8% in the second quarter of last year. For the first half of 2008, attrition was about 11% compared to 7% in the first half of last year. Groups are reducing their room block in advance of their travel days, as they are anticipating lower attendance for their events. These reductions in room nights impacted occupancy and revenues in the quarter, while the associated attrition and cancellation fees, which are recognized when collected, typically are not realized in that same quarter.

We also discussed in June how increased attrition is affecting our end year growth versus net bookings. Over the past couple of years, the impact of all the various adjustments to in the year gross bookings has resulted in net bookings being higher than gross bookings. This year, however, given the current trends in attrition, in the year bookings are now lower than gross bookings.

For the quarter same-store gross bookings were up 31%, in other words we signed contracts for 31% more room nights this year than we did last year. However, net bookings have decreased 18%. That is caused by a change in the attrition levels. In other words, we are having lots of success signing contracts with our customers; however attrition rates are limiting these positive impact.

Finally, at our Investor Day, we identified transient business as another risk factor for the balance of 2008. There were contrast what you are hearing from other lodging companies, we experienced an 8.9% growth in our same-store transient room revenue in this quarter. July continued this trend with transient revenues up about 25% versus the same month last year.

We dwelled a portion of our resources to building up this piece of our business and these efforts paid off by offsetting some of the group business lost their attrition. While we are encouraged by these results, we remain cautious about the outlook for the remainder of the summer, and the fourth quarter holiday season, our highest transient periods of the year.

I will discuss the impact these trends are expected to have on our balance of the year guidance, in my closing remarks. However, first, let's review the quarter's property level performance beginning with Opryland.

In Opryland the shift toward more corporate group business, first our ADR up 6.5%, which led to a 3% increase in revenue to $73.5 million. The increased ADR help to offset the decrease in occupancy that drove RevPAR down for the quarter. However, thanks to our cost control initiative and incoming revenue from attrition and resort fees, CCF increased 8.5% with margins of 31.4% for the quarter, up approximately 160 basis points.

This should be noted that the operating statistics from last year reflects 12,574 room nights being out of service. This year obviously we had no room nights out of service because our room renovation is complete.

Moving now to Florida for the Palms, the Palms had a very solid quarter with growth across all key metrics. The properties ADR increased due to additional transient guests, which helped to support the 3.6% revenue growth and the 8.3% increase in RevPAR for the quarter. Based on a favorable shift in mix for groups, ADR also was up for the quarter. CCF increased 12.4% for a 260 basis point increase in CCF margin.

Now looking at the Texan, revenue was down slightly at the Texan for the quarter. RevPAR was up about 1%, largely due to an increase in ADR that was offset by a decrease in occupancy. Total RevPAR decreased by less than 1%, and due to an increased attrition in cancellation fees and lower commission business, CCF increased 4% to about $16 million. CCF margin was 33.1%, and increased 160 basis points over last year.

Before discussing the results from the Gaylord National, I wanted to make one more comment about trends within our sales. Outside of the room spending growth in the first quarter, on an occupied room basis, in other words, how much each occupant was spending, was up 6.4%. That statistic has been growing at about 7% per year over the last couple of years. This past quarter outside the room spending growth, slowed to about a 4.2% per occupied room growth rate.

Now given the current challenging economic environment, we are pleased to be able to continue to drive 4.2% per occupied room growth. That said, we will be watching that statistic closely for continued signs or additional signs of belt tightening across our businesses.

Now move to the National. As Colin mentioned earlier, we were extremely pleased to host so many of you at the National in June. As those of you, who attended saw, the property is truly a spectacular example of the superiority of Gaylord properties. We continue to be extremely pleased with the success of this property, particularly the outside-the-room performance. Revenue for the quarter was $61.8 million, and RevPAR and total RevPAR were 143.19 and 359.02 respectively.

Now let me put this in perspective for you. In its first quarter of operation, one that we have probably said, we thought was not perfect from our perspective. The National was nearly the brand leader in RevPAR and total RevPAR. Looking at other measure that is comparison to our other properties, you should know that the National produced more banquet revenue per group per room than each of the other properties in our existing networks.

The National also ran a 10%, 17% and 44% premium and total revenue per occupied room to our other three properties the Texan, Palms, and Opryland respectively. Now, that is a spectacular performance for our first quarter of operations. In addition CCF was very solid with a 22.7% CCF margin, and as we continue to operate for hotel, we expect we will continue to get better from a margin management perspective.

As then looking to the property continue to grow and have reached approximately 1.5 million room nights. Obviously we are very proud of the accomplishments at the National in the quarter.

Now on to the outlook for the remainder of '08, based on the continuing trends and attrition and its impact in 2008 bookings and our continued cautiousness related to the transient business during the fourth quarter holiday period and some softening in outside-the-room spending levels, we are adjusting our same-store RevPAR and total RevPAR guidance to 1% growth to 3% growth. Additionally, total RevPAR we are adjusting down to 1% growth to 3% growth as well.

Now interestingly and as we said earlier, our business model is operating the way that we would expected to. So, from a CCF perspective, we believe that with the protections that our business model offers that our CCF will be more protective than one might think given a reduction in RevPAR and total RevPAR guidance. So, we are simply reducing the top end of the range of our CCF guidance from $207 million to $202 million.

With that, I will turn the call back over to Colin.

Colin Reed

Right, Dave. Thanks a lot. So, Pam, let's open up the lines for questions please.

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